REG - Contango HoldingsPLC - Variation to Strategic Partnership for Muchesu

Contango HoldingsAnnouncement

22/10/2025 09:00

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RNS Number : 3870E  Contango Holdings PLC  22 October 2025

22 October 2025

 

Contango Holdings PLC

("Contango" or the "Company")

 

Variation to Strategic Partnership for Muchesu

 

Contango Holdings Plc, a company focused on unlocking value from the +2
billion tonne Muchesu coal project in Zimbabwe ("Muchesu"), advises that it
has agreed a variation to the previously reported Strategic Partnership with
Huo Investments (Pvt) Limited ("Huo Investments" or the "Investor").

 

 

Background

 

As announced on 3 July 2024, Contango entered into binding agreements with the
Investor, which together comprised a purchase of a 51% equity interest in
Muchesu, a US$2 million Subscription into the Company, a Mineral Royalty
Agreement, and a US$20 million Revolving Facility Agreement (together, the
"Definitive Agreements").

 

During 2024 and 2025, the Investor has advanced material funding under the
Revolving Facility Agreement for the following:

 

·    Expansion of the mining footprint of Muchesu;

·    Installation of a large Dense Media Separation ("DMS") plant;

·    Substantial infrastructure works; and

·    Installation of coke batteries and associated value-enhancing
infrastructure.

 

Further operational detail and expenditure will be provided shortly in a
separate update.

 

With the Subscription completed in Q1 2025, Huo Investments became the
Company's largest shareholder with a holding of 20.42%. Royalty payments
commenced in 2025 in accordance with the Mineral Royalty Agreement, with
US$1,000,000 paid during H1 2025 and a further US$1,000,000 scheduled for
payment this quarter as set out in the Mineral Royalty Agreement.

 

Variation to the Definitive Agreements

 

Asset-Level Purchase

 

Muchesu is held by the Company's subsidiary in Zimbabwe being Monaf
Investments (Private) Limited ("Monaf").

 

The Definitive Agreements originally envisaged that the Investor would
purchase a 51% equity interest in Muchesu (via Monaf). This will now be
undertaken by Pacific Goal Investments Private Limited ("PGI"), a
Zimbabwe-focused investment vehicle equally owned by Mr Wencai Huo (the
principal of Huo Investments) and Mr Liu Jun. Definitive documentation has
been executed to reflect this change and is currently being registered with
the Central Bank in Zimbabwe.

 

PGI forms part of Pacific Goal Group, a Hong Kong-based industrial group with
extensive operations in Zimbabwe. The group is currently developing a major
mine-to-energy industrial park in the country, incorporating two power
stations, a graphite processing plant, and a nickel smelter. PGI also operates
a logistics fleet of more than 200 trucks, as well as holding interests in
other mining and power-related developments in Zimbabwe. This extensive
operational presence and expertise is expected to prove complimentary to
delivering value from the Muchesu project.

 

The purchase of 6.502% of shares in Monaf as announced on 12 March 2025, is
unaffected. These shares are now held through Lilyone Investments, a wholly
owned investment company of Mr Wencai Huo.

 

The revised ownership of Monaf is therefore as follows:

 

 Shareholder                  Holding
 PGI                          51.0%
 Contango                     24.0%
 Lilyone Investments          6.5%
 Local Minority Shareholders  18.5%

 

 

US$20,000,000 Revolving Credit Facility

 

PGI will now become the lender under the US$20 million Revolving Facility
Agreement. Funds advanced to date by Huo Investments are recognised and
assumed by PGI. As previously disclosed, advances under the facility rank pari
passu with the loans provided by Contango to Monaf (approximately US$20
million, the "CGO Debt"). Any repayments by Monaf to PGI under the facility
will require an equal payment to Contango until the CGO Debt is repaid in
full.

 

 

Subscription and Royalty Agreements

 

There is no change to the 20.42% shareholding held by Huo Investments in
Contango.

 

There is no change to the terms of the Mineral Royalty Agreement. Royalties
remain payable by Monaf to Contango for the life of mine as follows:

 

·      US$2 per tonne - thermal coal

·      US$4 per tonne - industrial coal

·      US$8 per tonne - coking coal

 

A minimum US$2 million per annum royalty is payable, uncapped. PGI has
confirmed that the next minimum royalty payment of US$1 million will be made
in the current quarter. The Definitive Agreements now record that royalty
payments to Contango will be made in priority, followed by payments relating
to the CGO Debt and the revolving facility on an equal basis.

 

 

 

Commenting, Daniel Dos Santos, CEO of Contango, said:

 

"These variations strengthen the partnership structure at Muchesu and
introduce PGI, part of Pacific Goal Group, as a committed strategic investor
with an established operational footprint in Zimbabwe. Their industrial
investments, including power, logistics and processing infrastructure, are
highly complementary to the long-term development of Muchesu.

 

At the same time, Huo Investments remains supportive through its shareholding
and previous contributions to advancing the site. We look forward to providing
a further operational update shortly, as activity on the ground continues to
build momentum."

 

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK domestic
law by virtue of the European Union (Withdrawal) Act 2018. Upon the
publication of this announcement, this inside information is now considered to
be in the public domain.

 

ENDS

 

Contango Holdings plc

Daniel Dos Santos - Chief Executive Officer

E: contango@stbridespartners.co.uk

 

Tavira Financial Limited - Financial Adviser & Broker

Jonathan Evans

T: +44 (0)20 7100 5100

 

St Brides Partners Ltd - Financial PR & Investor Relations

Susie Geliher

T: +44 (0)20 7236 1177

 

 

 

 

 

 

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